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TMI Blog2018 (8) TMI 2030X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;s length. However, the stand of Assessing Officer / TPO in rejecting the said plea of assessee was the tainted transactions vis- -vis costs incurred by the assessee both for associated enterprises and non-associated enterprises. In the totality of the above said facts and circumstances, where the stand of assessee has not been looked into by the TPO and has been brushed aside, we in the interest of justice, direct the Assessing Officer / TPO to determine arm's length price of international transactions undertaken by the assessee by applying most appropriate method i.e. internal TNMM method of man hourly rates. The assessee has also asked for various other adjustments for carving out differences which may also be looked into by the TPO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2 raised in the appeal. The ld. AR contended that the core issue in dispute is raised in ground Nos. 4, 5 and 6 of the appeal. The ground Nos. 3, 7 to 11 are in support of the core issue. The ld. AR submitted that the Transfer Pricing Officer (TPO) made transfer pricing adjustments to the tune of ₹ 5,08,87,680/- by applying Transactional Net Margin Method (TNMM). The Dispute Resolution Panel (DRP) upheld the same and the Assessing Officer passed assessment order in accordance with the directions of DRP. The assessee submitted before the authorities below that internal CUP or at the best TNMM should be applied as the most appropriate method to benchmark the international transactions. The ld. AR submitted that upward adjustment for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 is dismissed as not pressed. 6. The ground No. 3, 7 to 11 raised in the appeal are in support of the main issue raised in the appeal by the assessee in ground Nos. 4 to 6. Thus, the effective grounds raised by the assessee in appeal i.e. ground Nos. 4 to 6 are reproduced here-in-below : 4. The AO/DRP/TPO erred in rejecting CUP as the most appropriate method (MAM) to determine the arm's length price of the international transactions pertaining to provision of engineering design services to its AE as selected and applied by the appellant, without giving cogent reasons. 5. The AO/DRP/TPO erred in determining the arm's length price of the international transactions by applying Transactional Net Margin Method (TNMM) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration also, has been changing its stand i.e. in TP study report, TNMM method was selected. However, before the TPO, the assessee pleaded that internal CUP method was the most appropriate method, wherein hourly rates charged to associated enterprises at 24 Euros be applied as against charges levied on non-associated enterprise charges. The TPO on the other hand, had applied TNMM method and had made comparison with external comparables in order to benchmark international transactions of the assessee. We are of the view that in order to benchmark international transactions undertaken by the assessee, the most appropriate method needs to be applied. The question is which is the most appropriate method? The assessee had sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Accordingly, we find merit in the plea of assessee that hourly rates charged by it in providing specialized services to its associated enterprises can be the basis for verifying its stand as to whether the services provided by the assessee to its associated enterprises were at arm's length. However, the stand of Assessing Officer / TPO in rejecting the said plea of assessee was the tainted transactions vis- -vis costs incurred by the assessee both for associated enterprises and non-associated enterprises. In the totality of the above said facts and circumstances, where the stand of assessee has not been looked into by the TPO and has been brushed aside, we in the interest of justice, direct the Assessing Officer / TPO to determine ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent assessment year the Assessing Officer is directed to grant relief to the assessee in assessment year under appeal as the same would amount to double taxation. The Assessing Officer before deciding this issue shall grant opportunity of haring to the assessee, in accordance with law. Accordingly, ground Nos. 12 to 14 are allowed for statistical purpose. 10. In ground No. 15 the assessee has assailed initiation of penalty proceedings u/s. 274 r.w.s. 271(1)(c) of the Act. Challenge to penalty proceedings at this stage is pre-mature. Accordingly, ground No. 15 raised in the appeal is dismissed. 11. In the result, the appeal of the assessee is partly allowed for statistical purpose in the terms aforesaid. Order pronounced on W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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